Crist downsizes scope of U.S. Sugar land deal

The big question: Is buying half worth the investment?

April 2, 2009|By Josh Hafenbrack and Andy Reid Staff Writers

Dialing back an environmental dream to deal with economic realities, Gov. Charlie Crist on Wednesday announced a scaled-down, $533 million bid for 72,500 acres of U.S. Sugar Corp. land to help restore water flows to the Everglades.

Now the South Florida Water Management District, which leads Everglades restoration, must decide whether buying less than half the 180,000 acres of U.S. Sugar farmland previously proposed would accomplish enough to be worth the taxpayers' investment.

The land would be used to build reservoirs and treatment areas to clean, store and direct Lake Okeechobee water to what remains of the Everglades.

This is the second time that economic concerns forced Crist to scale back his ambitious Everglades plan. It began as a $1.74 billion bid to buy all of U.S. Sugar's land, its sugar mill, rail lines and other assets to clear the way for restoration. In November, the governor pared it down to a $1.34 billion land-only deal.

Despite the smaller scope, Crist said the land purchase still would be the biggest in Florida's history, representing acreage that's twice the size of Orlando.

"The economy has been what it has been. We have to deal within the parameters we are given," Crist said.

The deal gives the district a 10-year option to buy 107,500 additional acres owned by U.S. Sugar.

Taxpayers in Broward, Palm Beach and Miami-Dade counties, as well as the water district's 14 other counties, would pay for the deal.

The new proposal goes to the district's board next week. If the board agrees with the latest terms, the district and U.S. Sugar will negotiate final details. That amended deal could go back before the district board in May.

To move forward, the district still must overcome a court challenge to its plan to borrow the money for the plan. The district heads back to court next week.

The goal is still to close on the deal by September, district Executive Director Carol Wehle said.

In a significant change, the state tripled the rate at which it will lease back land to U.S. Sugar, to $150 an acre. The sugar giant agreed to the change because the $50 lease rate - about one-fourth of market prices - had become a "sticking point" for many, U.S. Sugar Senior Vice President Robert Coker said.

The lease term for U.S. Sugar to continue to farm on the 72,500 acres is still seven years with an option to renew, meaning the company will be in business until at least 2016 and probably longer. U.S. Sugar also will continue to farm on the 107,500 remaining acres until the state exercises its option to purchase the land, Coker said.

Crist's decision to downsize the sugar deal came amid a growing chorus of critics in the Legislature and elsewhere who said the district could not afford the land buy given dropping tax revenues amid a struggling economy.

"We are getting that which we can afford today," Department of Environmental Protection Secretary Mike Sole said.

Environmental groups have largely supported the state striking a deal with U.S. Sugar, even as the size continued to shrink Wednesday.

The new terms are "more targeted and economically feasible, while at the same time maintaining the governor's vision of restoring water flow from Lake Okeechobee to the Everglades," said Janet Bowman, of the Nature Conservancy.

The Everglades Foundation supported the scaled-down plan as a way to ensure that the "initiative remains alive" to acquire strategically-located land once thought unattainable for Everglades restoration, foundation chief executive Kirk Fordham said.

The foundation maintains that it will take about 130,000 acres to store the 1 million acre feet of water needed to restore the Everglades. Getting 72,500 acres would provide enough room to store a little less than half that, about 400,000 acre feet, foundation scientist Tom Van Lent estimated.

"This is a real opportunity to actually make progress," Van Lent said. "They can make a pretty good down payment."

Critics, however, still contend that the new deal will take money away from other long-stalled Everglades projects.

The water management district in June stopped work on a reservoir in western Palm Beach County intended to store water for the Everglades that already had cost taxpayers about $250 million. The U.S. Sugar deal brought into question whether the planned reservoir was in the right place.

Miccosukee Tribe attorney Dexter Lehtinen, who has long championed Everglades causes, said the cost of the new deal threatens to set back Everglades restoration 15 years.

Lehtinen called the scaled-down version a "bait and switch" from Crist's first proposal in June to buy up all of U.S. Sugar's assets and move sugar cane farming out of the way of Everglades restoration.

"I'm flabbergasted that just to get [his] name on a press release the governor will torpedo Everglades restoration," said Lehtinen, who is part of a legal challenge to the previous deal. "This thing stinks from one side to the other."